The Pension Benefit Guaranty Corporation (PBGC)
announced Friday it will file anobjection in bankruptcy court to provisions in UAL
Corporation’sdebtor-in-possession financing agreement. UAL
claimed those provisions prohibit thecompany from making required pension
payments.

In itsfiling, the PBGC will ask the bankruptcy judge to
modify the financing agreement to complywith the Employee Retirement Income Security Act
(ERISA). According to the PBGC, ERISA requires UAL
tocontinue funding its pension plans unless the plans
are either terminated orthe IRS grants a waiver of the minimum funding
requirements

“United’s decision to stop funding its pension
plans increases the riskof loss not only to the company’s workers and
retirees but toparticipants in other plans insured by the PBGC,”
said ExecutiveDirector Bradley Belt in a news release. “The
bankruptcy court should reject this attemptto sidestep the statutory funding rules. Agreements
between privateparties must not take precedence over federal
pension law.”

Of the $8.3 billion in underfunding, the PBGC
estimated thatit would be liable for $6.4 billion if all four plans
terminated. The$1.9 billion difference represents the benefits that
United’s workersand retirees would lose because they exceed the
guarantee limits set byCongress.